2025 PLMA Award Winner

Arizona Public Service (APS) celebrated five years since announcing its commitment to provide 100% clean and carbon-free electricity by 2050 while maintaining reliable and affordable energy to meet customers’ needs – providing customers with energy that is 51% clean today and growing. The clean energy commitment includes a nearer-term 2030 target of achieving a resource mix of 65% clean energy, with 45% of the generation portfolio coming from renewable energy.

Through collaboration with customers, APS operates one of the largest virtual power plants in North America. At the forefront of this resource is the Cool Rewards program, which incorporates smart thermostats for both residential and small-medium business customers. With approximately 98,500 smart thermostats in use, the program functions much like a conventional power plant by reducing the grid’s energy demand by 160 megawatts (MW). This network includes thousands of customer-owned devices, such as smart thermostats and home battery storage systems, which collectively act as an energy resource to reduce demand during peak periods.

In recent years, APS has encountered a significant increase in peak demand coupled with extreme temperature conditions. Last summer, Phoenix experienced an unprecedented stretch of 113 days with temperatures exceeding 100 degrees, marking the longest period in Arizona’s history. We expect peak demand to grow to more than 13,000 megawatts (MW) by 2038. For perspective, it took us 140 years to reach 8,200 MW, and we are increasing that by 60% in only 14 years. To address rising demand and extreme temperature challenges, we are collaborating with customers to significantly impact our peak times by expanding our virtual power plant.

As APS expands its virtual power plant, we are developing internal tools to offer insights into the locations of customers’ connected technologies participating in the Cool Rewards program and the Residential Battery pilot program. Last summer, we developed a dashboard that enables mapping device locations to substations and feeders. In July 2024, APS repair crews worked one of the strongest storms that damaged power poles and broke electrical equipment. To support our crews and protect nearby neighborhoods, we partnered with customers enrolled in our Cool Rewards Smart Thermostat program.

We used our internal visualization tool to identify connected customer resources in the affected area and initiated the first Cool Rewards location-based demand response event. The visualization tool insights helped us target about 2,800 customers in downtown to midtown Phoenix for a voluntary power conservation event, easing the grid strain from the storm damage. By leveraging data and utilizing our virtual power plant, we were able to relieve strain on the grid caused by the storm damage for the first time in history. This milestone demonstrates the transformative power of virtual power plants in creating a more resilient grid, enabling us to respond more effectively to extreme events and ensure greater reliability for our customers.

During the summer of 2024, APS piloted a new technology within the EnergyHub Edge DERMS known as Dynamic Load Shaping. Dynamic Load Shaping leverages AI and optimization to automatically dispatch devices and achieve predetermined load shapes. Specifically, APS sought to achieve a load shape that would:

• Maximize the value of solar generation
• Minimize snapback
• Reduce customer costs

At the start of the dynamic load shaping event, APS pre-cooled homes during midday when solar production was high. Afterward, there was a gap before the customer time-of-use period began, during which the VPP output was leveled to a controlled, constant value. Once the time-of-use rate period started, the VPP dispatched additional groups of thermostats to gradually increase load shed and help customers avoid peak rates. This strategy allowed APS to achieve an optimization period of more than seven hours, with increasing load shed throughout the event, and a nearly eliminated snapback.

To visualize APS’ results, please reference the final graph in this article from Canary Media: www.canarymedia.com/articles/virtual-power-plants/fine-tuning-how-homes-can-help-the-grid-as-virtual-power-plants.

Virtual power plants offer a key solution to the challenges currently facing the grid. These challenges include rapid load growth, increased customer costs due to rising grid investments, and outages caused by adverse weather conditions and aging infrastructure. These factors collectively impact the grid’s reliability, affordability, and resilience. As APS aims to contribute to a clean energy future, reliability and affordability are essential. By collaborating with customers over the next decade, APS plans to scale its virtual power plant initiatives. Additionally, APS will support innovation, research, and development of new technology. Over the next decade, the team will continue to evolve its existing program portfolio of connected devices and further innovate.

While many utilities use VPPs to shift load, using behind-the-meter resources to achieve predetermined load shapes during flexibility events was previously untested for APS. Going forward, APS plans to continue refining and testing new use cases for dynamic load shaping. These strategies will be especially important in the coming years, as APS anticipates its customers will require more than 13,000 MW of energy by 2038. For perspective, it took APS 140 years to reach 8,200 MW, and now it is increasing that by 60% in only 14 years. Managing this increased demand throughout APS’ service territory will require solutions that can handle diverse issues like extreme weather, congestion, renewable generation variability, and rising energy costs.